07 December 2017

There are many awards issued throughout the year in
various industries. Some you are nominated for. Some you can voted
for yourself. Others are awarded to celebrate the volume and quality of
the business you produce. Thankfully, the latter applies to the latest
award that AToM has just received. At a lavish awards ceremony held
at the fantastic Weston Park Stately Home in the Midlands, AToM was confirmed
as the Best Buy to Let Distributor for HMOs (Houses of Multiple Occupation) in
2017 from specialist lender Precise Mortgages. This was superb
recognition for the amazing and highly knowledgeable staff we have at AToM and
specifically those who specialise in the Buy to Let sector. Well done
team!

I mention credit scoring/searching quite a bit, but
it really is so important in the current financial world when lenders are
deciding to lend to you, or not. Most lenders credit score applications
based upon the amount of credit you have, whether you are on the electoral role
and your recent payment profile on any existing credit. The number
of recent credit searches you have on file will also have an impact. So,
over the festive period, just be wary when getting quotes for car or home insurance,
mobiles, etc that each of these will register a search against you, especially
if you’re planning to review your mortgage in the near future.

We have seen a number of good product innovations
during the last few weeks. One that sticks out is that Precise Mortgages
have recently launched a new buy to let that allows the customers personal
income to top up any rental shortfall. Usually the mortgage on a buy to
let is calculated on the rental it achieves. Occasionally this may not achieve
the loan required. So, to allow surplus income to be used to ‘top this
up’ is a great addition from Precise.

The Buy to Let sector generally is becoming very
competitive and despite an increasing number of options and new lenders
launching in to the market, demand is still increasing. Whilst
first time buyers struggle to get on the property ladder (hopefully the recent
stamp duty changes may help?) and savings interest rates remain low, many
continue to invest long term in to property and there's no immediate reason why
this should change. However, with all of the recent tax changes on Buy to
Lets, you should not only seek professional mortgage advice, but also tax
advice from an accountant who understands property. Get it right first
time.

30 November 2017

One of the most frequent questions to start a
mortgage interview tends to be around ‘How much can I borrow?’.
Only a few years ago, that could easily have been up to 8 x income with the
minimal of fuss. Oh, how things have changed, and rightly so! Those
were times with little control and the lengthy recession bore testament!

Today it is so much more intense! For
example, a lender will require to know your monthly budget spend figures, right
down to every direct debit on your bank statements, including council tax,
insurances, mobile phones, lottery payments and gym membership! From
these monthly outgoings, the lender will look at affordability and decide from
there what mortgage amount might be available to you. However, on the
other side, not only can it be restrictive depending on your monthly outgoings,
but it can also be very generous depending on what little outgoings you
have! The lender has a duty to make sure you can afford your
mortgage today, as well as when rates rise and specifically to it being
considered affordable over a 5 year period.

But this also
means that what was once an affordable mortgage may suddenly become
unaffordable due to the perception the lender has on consumer spending habits,
both historically and projected for the future.

We have seen the phasing out of income multiples
and the introduction of affordability models. So, no more straight forward 4 or 5 x income
discussions. The amount you can borrow will depend on your monthly
net income against expenditure and living costs.

However, this also works
positively for the right loan to value,
right affordability and right customer, as lenders are willing to offer a
little bit more.

With the
increase in requirements, the time taken in research prior to recommendation
for a suitable mortgage product has also increased, as have the lenders own
underwriting procedures. So, beware if you are in a
rush!

Finally,
whilst the holiday period is up on us, do take time to dig out that paperwork
and come and have a chat. With
rates so low, now might be a good time to be exploring these options and it could be a very beneficial exercise!

23 November 2017

There
have been a number of competitive launches this week in the Buy to Let
sector. Especially for those buying a
House of Multiple Occupation, or in a limited company name.

The
more noticeable includes the launch of new products from our friends at Precise
Mortgages, designed to assist those looking to purchase investment properties
in a Limited Company name. With Buy to
Lets, the loan tends to be calculated based on the rental income achievable. If
the product is not a 5-year fixed rate, then this is required to be at a
nominal rate of, circa, 5.5% and with rental required at up to 145% of that
figure. With the Precise product, the
lender will use the pay rate of 3.09% to calculate the loan, as it is a fixed
rate for five years, and with a 125% rental requirement, depending on
individual circumstances. This makes a
huge difference to the loan available, and a fixed rate that low is an attractive
deal also.

With
the recent reduction in mortgage interest relief, since April 2017, landlords
are only able to offset finance costs at the basic rate of tax at 20%. This affects higher rate tax payers, but also
basic rate tax payers if they are pushed in to the higher rate bracket, perhaps
as a result of their rental income. As
such, we are seeing more and more customers look at a Ltd Company Special
Purpose Vehicle to hold their investment properties and provide more efficient
tax benefits under current legislation.
Obviously, tax advice should be sought as individual circumstances vary!

Sticking
within this area, Landbay have launched some attractive Buy to Let tracker
rates with no redemption penalties at all.
These products are great for those looking at a short term project, or
perhaps where they want to re-mortgage after a short period, possibly following
some works to the property, and taking money out of the increased value to
reinvest in further properties, and so on.

Conversely,
with lenders reducing rates and chasing completion volumes for year end, we are
seeing more people being declined. Not
necessarily due to adverse credit, but because their credit score is not as
high as they thought, and they don't meet the lenders requirements as a result.

Credit
scoring is one of the most widely used means to assess a customer’s ability to
obtain a mortgage. All credit scores
include a credit search – this reviews your financial history, payments to
utility suppliers, mobile phones, etc.
The high street lenders, in the main, use credit scoring. However, do your homework as many smaller
lenders will offer just as attractive rates, but they will manually assess your
ability to obtain a mortgage and use a human to assess your credit profile,
rather than a computer aided credit score decision making system.

16 November 2017

According to our good friends at Shawbrook Bank, there are
an estimated 600,000 people due to come to maturity on their interest only
mortgage by 2020. Many will probably have no way of repaying their
interest only mortgage. Some will have endowments that didn’t meet
expectations, or maybe the house has not increased in price as much as
hoped. Stricter mortgage rules and lending criteria has made it harder
for those over 55 wanting to re-mortgage. However, despite the high street
being almost a closed entity, there are plenty of other options (not that your
current lender are likely to advise them - they just want their money back!).

Come normal retirement age, the lender has the right to
request repayment of their loan at end of the mortgage term. If the
customer has no way of repaying this and has just continued to pay the interest
over the last twenty five years or so, they face the possibility of having
their home repossessed or being forced to move out. On the high street,
the end of the loan term will normally hit those aged between 65 to 70.
This is not new news, but does highlight that many people are still burying
their head in the sand and hoping this will go away or the lender may be
lenient. No chance on either. You may get a one or two year
extension, but the lender will want their money back and that you cannot avoid.

We all know life doesn't end at age 65-70 and neither should
it on the high street! Often, retired people have managed their finances
successfully over the years and enter retirement mortgage free. At the
same time, many, whilst having no mortgage, also suffer from reduced income and
there is a saying in our profession that it is not always wise to have
everything tied up in bricks and mortar and yet have nothing to spend.
Others may wish to continue their mortgage past normal lender retirement age,
whilst they may still be working. There are schemes where equity can be
turned into a mortgage (not necessarily equity release) and where off-spring
may be able to assist with the repayments in order to secure and protect their
inheritance whilst also ensuring a comfortable retirement for their
parents. This is not right for everyone but it is certainly worth talking
to a qualified adviser to review all possibilities.

There are a number of lenders that recognise that 'normal
retirement' age is no longer set in stone and people continue to work long in
to later life. These are not high street names and as such, rates may be
slightly higher than the big super tanker, large volume producing household
names that we are used to. But at least they will consider helping out
and could keep you in your home!

09 November 2017

Last week saw the Bank Base rate rise for the first time in
ten years. It now stands at 0.5%. The monetary policy, which meets each month
to set the base rate, voted by 7 to 2 to increase the rate, in a bid to slow
down the rate of inflation which currently stands close to 3%, 1% over its
target.

For those with mortgages on a tracker rate, the lenders will
probably pass on the full 0.25% increase, with effect from the following
month. So, expect a rate increase letter
and a higher payment in December!

For those on fixed rates, nothing will change, until your
product fixed rate period ends. Then it
will be down to what’s available at the time.
Unless you are on quite a high fixed rate, in which case sometimes it’s
worth looking to see if it’s beneficial to pay any redemption penalties you may
have to fix on to a lower rate, that might be available now. This needs professional advice.

For those on the lenders standard variable rates –
WHY?! The lenders SVR tends to be more
expensive than other products available and you should act now as you’re
probably paying too much as it is! Some
lenders SVRs are circa 5%! Lenders will
alter their SVRs when they choose.

The increase in 0.25% will probably take an extra £21 out of
your pocket each month, per £100,000 on your mortgage. Not vast amounts. However, this could signal the possible end
of the cheap rates…

Lenders tend to buy tranches of fixed rate funds from the
money markets. This is then lent to the
consumer until the tranche ends. At that
point, they acquire more funds and so on.
However, the latter will inevitably be more expensive and so rates will
rise, etc. As I write, some lenders have increased rates,
marginally, but there’s still some amazing products available and I suspect
these will be around for some time yet as lenders are desperate for business. Many products also include free legal costs
and free valuations on remortgages, so minimal costs to change lender. But do remember, although I don’t think they
will for some while yet, these products can be withdrawn at any time. So, if you’re thinking of changing or
reviewing your mortgage, now might be the right time to get the paperwork out!

02 November 2017

A second Buy to Let with only a 15%
deposit requirement has been launched into the Market. Exclusively through just three distributors
in the UK (inc AToM!), BlueZest is a new lender to market and has some superb
products. These products are part of a broader range that allow landlords and
developers to do refurbishments, conversions and new builds with funds advanced
upfront, secured on non-development property that they already own. These
mortgage products are available for periods up to 18 months with competitive
rates, without the need for bridging finance.
This is a fantastic offering and we look forward to working with them.

Despite the
continued talk of rates rising, there is a lot of activity in the market place
and some rates have even decreased (Nationwide with some residential rates by
up to 0.5%). Foundation Home Loans has
launched a new Buy to Let range with just a fixed fee of £1,999 (most lenders
charge up to 2% of the loan amount), for loans up to £1m. And Accord Mortgages has added a £500
cashback to all of their Buy to Let fixed rate house purchase products. Obviously, terms and conditions apply.

The Buy to
Let sector generally is becoming very competitive and despite an increasing
number of options and recent regulation changes to the market, demand is still
increasing. Whilst first time buyers
struggle to get on the property ladder and savings interest rates remain low,
many continue to invest long term in to property and there's no immediate
reason why this should change.

The really
positive news is the number of new lenders who have launched this year. A sign of the times and that funding is a lot
easier to achieve compared to recent years.
This has also bought in rate price wars and this can only be a good
thing for the end consumer and keeps competition rife.

However,
with all of the recent tax changes on Buy to Lets, you should not only seek
professional mortgage advice, but tax advice from an accountant who understands
property and all the new rules surrounding landlords and, where applicable,
portfolio landlords.

26 October 2017

There have been a number of remortgage applications recently
for those looking to raise funds to purchase other properties or to make
improvements to their current homes.
Just around the local area, I have seen an amazing amount of building
work and renovations / extensions being carried out. Many home owners appear to be improving their
current residence rather than taking the big leap of selling and moving up (or
down) the ladder. This appears
consistent with the general view that there is a shortage of properties up for
sale.

Other consumers might be making the next step, but are then
renting out their current property on a Buy to Let basis rather than selling
it. Nice if you are in that lucky
position! The rental market is certainly
buoyant and showing no signs of slowing down over the coming months. So a Buy
to Let might provide you with a modest return for your investment and may be
the start of building a little portfolio nest egg for later on life. We have
noticed that this is a growing desire for many who fear that their pension arrangements
may not be sufficient and that rental income may be a suitable supplement. Many new lenders have also launched in to
this sector over recent months.

Over the last week we’ve seen rate increases in the fixed
rates arena as column inches increase in speculation over a bank base rate rise
in November. However, lenders are still
competing for business even as we move in to the final stages of the year. We’ve seen reductions in the Buy to Let
sector and the specialist bridging/short term lending market has seen movements
in both criteria and rate decreases.
There are many opportunities whatever your circumstances and lenders are
willing to have a conversation in order to do the right deal.

Finally, AToM was thrilled to receive a National Mortgage Adviser
Award for the Best Use of Technology last month. Many thanks to everyone who voted for us, it
really is appreciated!